Breaking $10,000! Prices of European and American routes skyrocket

Freight rates have skyrocketed, and what is coming is finally coming.

Affected by the situation in the Red Sea, prices on European and American routes have soared, with container freight rates on some routes soaring by nearly 600%. In February, container freight rates on the China-Northern Europe route even exceeded $10,000. Due to flight delays, shipping capacity decreased rapidly in mid-January, and a new round of container shortage crisis has erupted. Many freight forwarders said that space was tight, and the main theme of ocean shipping in late January was "crazy growth."

At the same time, affected by the bad weather in the United States and the strike in Germany, the last-mile delivery in Europe and the United States is also going through a crisis. Fortunately, the peak season delivery fees for Amazon sellers have ended, and the increased profits can offset the increase in shipping prices.

Ocean freight rates have doubled or tripled, and container freight rates have soared by nearly 600%

The situation in the Red Sea has heated up, pushing up prices in the global shipping market. Prices on European and American routes that domestic sellers are concerned about have soared!

The routes most affected are undoubtedly the European ones. Recently, container freight rates on some Asia -Europe routes have soared by nearly 600% .

Freight forwarder Li San lamented that he knew last week that prices would rise after the 15th, and now the price has risen too much to bear, but what is coming has finally come! Another logistics person said that the ocean freight to Europe has been rising, and the current ocean freight price has doubled or tripled.

The Loadstar reported that space prices on the China to Northern Europe route were staggeringly high in February, with freight rates exceeding $10,000 per 40-foot container.

The direct reason for the soaring prices is that the current Red Sea crisis cannot be resolved in a short period of time, and routes between Europe and the East Coast of the United States are bypassing the Cape of Good Hope, which increases costs.

On the other hand, to compensate for the impact of the suspension of the Red Sea route, many shipping companies transferred ships from other routes to the Asia -Europe and Asia-Mediterranean routes, which in turn pushed up shipping costs on other routes.

Among the increases in other routes, the US route performed the strongest. First, the overall demand for the US route is large, and second, affected by the efficiency of the Panama Canal navigation, the tight capacity situation on the North American route has intensified. Currently, the freight rates in the North American route container market have soared, rising by nearly 50% in a single week!

On January 12, the market freight rate (sea freight and sea freight surcharge) from Shanghai Port to the basic ports in the western United States was US$3,974/FEU, up 43.2% from the previous period. The market freight rate (sea freight and sea freight surcharge) from Shanghai Port to the basic ports in the eastern United States was US$5,813/FEU, up 47.9% from the previous period.

At the same time, some trans-Pacific shipping companies will introduce new FAK rates, which will take effect from January 15. The freight rate for a 40-foot container on the west coast of the United States will reach US$5,000, and the freight rate for a 40-foot container on the east coast and Gulf Coast ports will reach US$7,000.

Starting from the 15th, Maersk Mediterranean Shipping Company has raised its freight rates for late January, with the freight rates for the US West Coast route rising to US$5,000, the US East Coast route rising to US$6,900, and the Gulf of Mexico route rising to US$7,300. The industry predicts that trans-Pacific freight rates may reach a new high since the beginning of 2022.

Since the 15th, France's CMA CGM has also raised the freight rate for 20-foot containers to western Mediterranean ports to US$3,500, while the freight rate for 40-foot containers has risen to US$6,000.

Container ship traffic in the Red Sea has dropped by 90%, and container shortages have intensified

As prices skyrocket, container shortages are worsening, the Red Sea crisis continues, and more ships are choosing to bypass the Red Sea.

On the 12th local time , after the US and UK launched airstrikes on Houthi targets in Yemen, another four large oil tankers avoided their original Red Sea routes . As of the 12th, the number of container ships that have been determined to be diverted due to the situation in the Red Sea is 388, with an estimated total capacity of 5.13 million TEUs.

Data from ship brokerage firm Clarksons showed that in the first week of January this year , the number of container ships entering and leaving the Suez Canal through the Red Sea fell by 90% compared with the same period last year.

Judging from the local tensions , shipping companies may avoid the Red Sea route for longer . The rerouting has resulted in an additional $1 million in fuel costs for the long journey around the Cape of Good Hope . While the costs have increased, the detour also means that shipping schedules will be extended, ships will be frequently delayed, and the limited circulation of empty containers has become a primary problem.

Due to the delay of the return voyage, some containers cannot be shipped back to Asia in time. At present, the supply of empty container equipment in Asia is extremely tight, and the shipping companies only release containers for large quantities of "VIP contracts" or shippers willing to pay high freight rates. The current long-term contract rates of some shippers will no longer be fulfilled.

With the arrival of the Chinese New Year, many shippers want to ship before the New Year. If someone is willing to pay a high price, the shipping company will definitely give priority to transportation. Previously, contracts with lower prices will be postponed. Currently, all containers delivered to the terminal cannot be guaranteed to be shipped before the New Year.

Freight forwarder Alan said that containers are indeed in short supply now . There was almost no space in late January and the shortage of containers is serious . The same is true for other companies. Prices follow the market and container prices have also been pushed up a lot. Now they recommend customers to use air freight or direct express delivery.

The shortage of containers, coupled with the demand for shipments before the Lunar New Year, will undoubtedly further push up freight rates to Europe and the United States. While sellers' shipping costs are rising, the final delivery to Europe and the United States is also not smooth.

Strikes and bad weather cause delays to last leg of flights to Europe and the US

Hamburg Port in Germany is the third largest container port in Europe. Local farmers protested against the gradual reduction of subsidies for agricultural diesel. The strike team blocked the Port of Hamburg with tractors . It is understood that as many as 600 farmers participated in the protest, and tractors were escorted to the port from three different directions. The plan has lasted for several days.

After the strike, Maersk immediately issued an emergency notice and warned that serious delays in inland transportation are expected and the goods may not be delivered at all!

Other freight forwarders also issued notices that due to large-scale demonstrations from January 8 to 15, important transportation points such as federal highways and highway entrances and exits and industrial zone entrances will be blocked, which may cause delays in cargo transportation.

In the United States, the entire country faced severe weather on January 13th local time . The eastern region of the United States was threatened by floods, and more than a dozen states in the central United States faced cold wave warnings.

FlightAware data showed that as of the morning of the 13th, a total of 1,062 flights were canceled across the United States . Among them, 56% of flights were canceled at Buffalo Niagara International Airport in New York State , and the governor of New York State declared a state of emergency in western New York on the afternoon of the 12th . The severe weather also caused widespread power outages in the United States .

Delays in the last leg of the journey to Europe and the United States are inevitable, but the peak season delivery fee for Amazon sellers is finally coming to an end. The fee will be charged from October 15, 2023 to January 14, 2024. With the arrival of January 15, some sellers said that they could earn two or three more yuan per order, and their profits increased again. Some sellers also joked that they had been looking forward to the end of the peak season. Some peers also hoped that they would not be charged high peak season delivery fees and storage fees next year (this is impossible).

Cross-border sellers can never avoid the logistics link. Various problems in the first and last stages come one after another. Everyone can make shipping plans in advance.

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